Allowed

The Oriental Insurance Co. Ltd. v. Shri.Manik R. Jagdale and Ors.

Bombay HC12 Oct 2007LPA/195/2007

Case brief

AI extract

What is this about?

The High Court of Bombay in Letters Patent Appeal quashed the Charity Commissioner's order revoking a sanction for the sale of trust property. The court held that revocation under Section 36(2) requires fraud, misrepresentation, or concealment of material facts, not merely a change in land use classification. Section 41E was also held not to grant revocation powers.

What did the court decide?

Impugned order revoking sanction, judgment of single Judge, and civil applications were quashed/set aside as an appeal was allowed on terms.

The Oriental Insurance Co. Ltd. Vs Shri.Manik R. Jagdale… — Property and Title | Bombay HC (2007)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION

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 LETTERS PATENT APPEAL NO.146 OF 2001
 IN

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 WRIT PETITION NO.2713 OF 1992

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 Shri Bhagchand H. Sonigara .. Petitioner

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Vs.

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 Shri Malhari V. Taras
 since deceased through his L.R.s
 1A Sonabai Malhari Taras & Ors. .. Respondents

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 Mr.S.U.Kamdar i/b Mr.R.N.Sanghavi for the
 petitioner

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 Mr.A.S.Patil i/b Ms.Suhasini Mutalik for respondent
 nos.2 to 7

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 Mr.R.M.Patne, A.G.P. for respondent nos.9

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 CORAM : J.N.PATEL &
 A.A.SAYED, JJ.

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DATED : 8TH OCTOBER, 2007

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P.C. (Per J.N. Patel, J.):

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 1. Heard the learned counsel for the parties.

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 2. This Letters Patent Appeal has been

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 preferred impugning the decision dt.6.2.92 of the
 Charity Commissioner, Maharashtra State, Bombay
 which came to be confirmed by the learned single
 Judge of this court by judgment and order

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 dt.01.02.01 in Writ Petition No.2713 of 1992. The

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 learned single Judge of this court directed the
 respondent trust to refund the amount of

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 Rs.50,000/- along with simple interest thereon at
 the rate of 11% per annum from the date of payment
 till payment and directed payment to be made within
 4 weeks from the date of passing of the order. By
 observing that the Charity Commissioner was
 justified in revoking the sanction order
 dt.27.01.1988 passed by the Joint Charity

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 Commissioner, Pune in Application no.176 of 1987 on
 the background that the Government of Maharashtra
 by its Notification, appearing in the Government
 Gazette dated 07.10.1989 has released the land in
 question for non-agricultural development. The
 learned single Judge found that the Charity
 Commissioner is clothed with such powers if sub
 section 2 of section 36 of the Bombay Public Trust
 Act, 1950 is read alongwith section 41E of the
 B.P.T.Act.

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 3. In nutshell the background facts which led
 to the passing of the impugned order by the Charity
 Commissioner which came to be confirmed by the

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 learned single Judge of this court can be summed up
 as under;

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 4. The Respondent Magas Varga Seva Sangh, a
 public trust having registration no.F-507(Pune),
 purchased the land out of survey no.40, Hissa
 No.1-4/1B, admeasuring about 3 acres situated at
 Kivale, Tal. Haveli, Dist. Pune from Malhavi
 Vithoba Taras by registered sale deed which came to
 be registered in the office of the Sub Registrar
 Haveli No.I at Sr.No.840 dated 17.04.1978 for the
 purpose of erecting a school building and hostels.
 It so happened that as the trust was indebted in
 the sum of Rs.2,73,687/- it was decided to alienate
 the said property and therefore, they filed an
 application dated 6.2.86 with the Joint Charity
 Commissioner, Pune for disposal of the said land.
 A public notice was published on 06.02.1986 in
 Dynic Rashtra Tej and again on 20.12.1987 calling
 for offers and objections, if any. After
 considering the same, the Joint Charity
 Commissioner by its order dated 21.07.1988 accorded
 sanction under section 36(1)(a) of the Bombay
 Public Trust Act, 1950 to sell the part of the

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 immovable property of the above trust and piece of
 land bearing Survey No.40 Hissa Nos.1 to 4 part 1B,
 admeasuring 3 Acres to the trustees for a sum of
 Rs.1,80,000/- on certain terms and conditions.

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 5. Pursuant to the said order, the appellants
 paid a sum of Rs.50,000/- as earnest money to the
 respondent trust. It appears that while the
 transaction was being processed, the predecessor in
 title of the land in question sold to the trust,
 Magas Varga Seva Sangh filed an application before
 the Joint Charity Commissioner under section 36(2)
 of the Bombay Public Trusts Act, 1950 objecting to
 the said transaction on various grounds. One of
 the major issue being that the land in question is
 declared as non-agricultural land by the State
 Government by its Notification dated 07.10.1989.
 The application was transferred before the Charity
 Commissioner who after examining the matter found
 that the Chairman of the trust filed an application
 dt.18.07.1990 alongwith the Xerox copy of the
 Notification and brought to his notice that the
 permission to sell the land to Shri Bhagchand
 Himmatmal Sonigara and others, be cancelled and in

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 the interest of the Trust, it be granted permission

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 to sell the plots, after getting the lay-out
 sanctioned by the Collector, Pune. Subsequently,
 it so happened that the trust did not press for the
 application and requested the Charity Commissioner
 to confirm the order of the Joint Charity
 Commissioner dated 27.01.1988.

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 6. The Charity Commissioner took notice of the
 fact that in so far as the application filed by
 Malhari Vithoba Taras, the predecessor in title who
 has sold the land in question to Magas Varg Seva
 Sangh is concerned, he has executed an
 unconditional sale deed i.e. without any

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 restriction that the land in question would be
 utilised only for a particular purpose, or if it is
 to be re-sold, it will be returned back to the

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 applicant Mr.M.V.Taras and, therefore, the
 objection raised by him relating to the said
 transaction was held to be of no substance but he
 agitated that the market value of the trust
 property has gone up to Rs.3,00,000/- for the
 reasons that the land in question has been now
 declared as available for non-agricultural

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 development and felt that it will be proper to

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 revoke the order of sanction dated 27.01.1988 and
 if at all the Magas Varg Seva Sangh wants to sell
 the land in question, it will have to go in for
 proper advertisement and in the event alongwith the
 prospective purchasers, the present applicant, can
 offer their bid and for the said reason the Charity
 Commissioner revoked the sanction order
 dt.21.7.1988 which was challenged before this court
 which came to be confirmed by the learned single
 Judge.

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 7. Mr.Kamdar, the learned counsel appearing
 for the appellants submits that the impugned order
 passed by the Charity Commissioner cannot be
 sustained in law as after the Charity Commissioner
 has accorded sanction under section 36 of the
 Bombay Public Trusts Act, he can revoke the same
 only under sub section 2 of section 36 and there is
 no other provision under the Bombay Public Trusts
 Act which vests power in the Charity Commissioner
 to revoke his order of sanction. It is submitted
 that the impugned order is passed on the ground
 that due to passage of time the land in question

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 for which sanction was accorded by the Joint
 Charity Commissioner having been notified in the
 development plan as available for non agricultural
 development, that itself cannot be a reason to
 revoke the sanction as sub section 2 of section 36
 of the said Act does not provide for such a
 contingency and, therefore, the impugned order was
 without any Jurisdiction vested in the Charity
 Commissioner and therefore, illegal and liable to
 be quashed and set aside.

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 8. It is further submitted by Mr.Kamdar, the
 learned counsel for the appellants that the learned
 single Judge has misread the provisions of section
 36(2) alongwith s.41(E) of the Bombay Public Trusts
 Act and upheld the order of the Charity
 Commissioner which is erroneous as the two sections
 operate in different fields and even combined
 reading of subsection 2 of section 36 and 41(E)
 does not vest with the Charity Commissioner any
 powers to revoke the sanction accorded earlier for
 sale of the land unless it meets the requirements
 of sub section 2 of section 36 i.e. unless it
 shows that the sanction was obtained by fraud or

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 misrepresentation or by concealing the facts

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 material for the purpose of sanction which is not
 the case. It is further submitted that the plain
 reading of section 41E would go to show that the
 said provision vest in the Charity Commissioner or
 its subordinates to act in the interest of the
 trust for the protection of Charities and enable
 the Charity Commissioner to grant injunction to
 preserve the trust property but does not provide
 for revocation of the sanction granted u.s.36 of
 the B.P.T. Act for sale of the immovable property
 of the trust.

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 9. It appears that during the pendency of the
 appeal, the legal heirs of Mr.Malhari V. Taras at
 whose instance the proceedings were initiated which
 led to the passing of the impugned order were
 brought on record as Mr.Malhari V. Taras has
 expired but the appellants have deleted them as
 they were not proper or necessary party which also
 stands substantiated from the finding of the
 Charity Commissioner in the impugned order nor this
 was the reason for revocation of the sanction.
 Market Value was found to be unjustified for

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 revocation of the order of sanction dt.27.1.88 as
 subsequently the user of the land was changed in
 the Development plan from agriculture to
 non-agriculture.

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 10. On behalf of the trust, it is submitted
 that the trustees have acted in a bonafide manner
 and that after the sanction was accorded nobody
 interested in the affairs of the trust as well as
 its beneficiaries have challenged the order and
 that at the relevant time whatever was the best
 offer received by the trust was accepted and duly
 examined by the Joint Charity Commissioner who
 accorded sanction to alienate the land in
 accordance with the terms and conditions specified
 in the order.

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 11. It is submitted that due to passage of
 time, there was a change in the development plan
 which did appreciate the value of the property and
 that the trust having taken a decision not to
 develop the property itself, as observed by the
 Charity Commissioner, has passed a resolution that
 the property can be sold to the appellants in

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 accordance with the order of sanction and on

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 negotiation the appellants have agreed to pay a sum
 of Rs.5,00,000/- lacs instead of Rs.1,80,000/- and
 that they are tendering the copy of the resolution
 alongwith the praecipe in the court. Copy of the
 resolution is taken on record and marked X for
 identification.

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 12. On behalf of the Charity Commissioner, the
 learned A.G.P. submitted that the Charity
 Commissioner is enjoined with the responsibility of
 not only overlooking the administration of the
 public trusts but also to see that the trustees act
 in the interest of the trust and for that reason s.
 36 of the B.P.T.Act provides that no sale, exchange
 or gift of any immovable property, and no lease for
 a period exceeding ten years in the case of
 agricultural land or for a period exceeding three
 years in the case of non-agricultural land or a
 building belonging to a public trust, shall be
 valid without the previous sanction of the Charity
 Commissioner. This is a check laid by the statute
 on the alienation of immovable property by the
 public trust and Approval by the Charity

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 Commissioner ensures reasonableness of the

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 transaction and that it is in the interest of the
 trust.

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 13. The learned A.G.P. fairly concedes that in
 so far as the present case is concerned, the
 Charity Commissioner having rejected the
 application, the predecessor in title of the land
 in question was not vested with any power to revoke
 the order of sanction for reasons other than
 provided in subsection (2) of section 36 of the
 B.P.T.Act. On principle, ld.A.G.P. has submitted

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 that there can be no quarrel over the issue as
 provisions of s.41(E) of the Bombay Public Trusts
 Act cannot be read to vest with the Charity
 Commissioner the powers to revoke the valid
 sanction accorded u.s.36 and, therefore, this court
 may pass appropriate orders in the matter.

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 14. The issue is well settled that the power
 under Section 36(2) is not a power to review.
 Power can be invoked only if there is fraud,
 misrepresentation or concealment of material for
 vitiating sanction granted and the sanction granted

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 merges into the sale deed executed. The Joint

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 Charity Commissioner on examining the case was
 satisfied and accorded sanction to the Trust to
 alienate the land in favour of the appellants who
 were at the relevant time the highest bidder.
 There is nothing on record to show that there was
 any fraud, concealment of material which would
 vitiate such sanction except that subsequent to the
 grant of sanction after the appellants deposited
 the earnest money and the matter was being
 processed for execution of sale deed an application
 came to be filed by the predecessor in title of the
 land sold to the trust i.e. Magas Varga Seva Sangh
 trust that the land in question now being notified
 in the development plan for non-agricultural
 purpose thereby its value would stand appreciated.
 The sanction came to be accorded by the Joint
 Charity Commissioner by considering all the pros
 and cons as prevailing on the date. The order of
 sanction came to be passed and at the relevant
 time, there was nothing brought on record that the
 development plan permits the subject matter of the
 application for according sanction i.e. use of
 agricultural land for non-agricultural purpose and,

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 therefore, question of invoking sub section 2 of

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 section 36 does not arise at all.

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 15. In so far as s.41(E) is concerned, the
 learned single Judge has not examined the issue in
 its correct perspective but merely observed that
 the court should not exercise its extraordinary
 jurisdiction to interfere with the order of the
 Charity Commissioner under the apprehension that it
 is not as if the Joint Charity Commissioner was not
 clothed with the power and further it observed that
 at the highest, section 41E contemplates that it
 should be brought to the notice of the Charity
 Commissioner either by the Deputy or Assistant
 Charity Commissioner through his report or by an
 application by atleast two persons having interest
 and that is only a procedural requirement so as to
 ensure that frivolous applications are not made
 and/or that there is some responsibility for the
 matter being placed before the Charity
 Commissioner. It was brought to the notice of the
 Charity Commissioner that the value of the property
 for which it was sold was less than the market
 value. Apart from that during the pendency of the

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 proceedings it transpired that the property had

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 been changed into non-agricultural use and on the
 basis of which considering public interest invoked
 the powers and set aside the sale. With due
 respect to the learned single Judge, that is not
 the purport of section 41E so as to enable the
 Charity Commissioner to interfere with sanction
 which was accorded complying all the requirements
 necessary for the same. Therefore, we quash and
 set aside the impugned order passed by the Charity
 Commissioner revoking the sanction accorded by the
 Joint Charity Commissioner as on the date of the
 order so also the judgment and order of the learned
 single Judge.

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 16. The appellants have agreed to pay a sum of
 Rs.5.0 lacs towards consideration of the said piece
 of land which was the subject matter of the
 application seeking sanction. The parties are at
 liberty to take further steps and complete the
 transaction in accordance with the terms of
 negotiation which has been accepted by the
 respondent trust under the resolution placed before
 this court. They shall inform the Charity

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 Commissioner immediately after completion of the
 transaction so that necessary entry be made in the
 Register of property owned by the Trust.

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 17. The appeal is allowed on the aforesaid

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 terms with no order as to costs. In view thereof,
 Civil Application No.289 of 2007 and 165 of 2001 do
 not survive. The same are dismissed as

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 infructuous.

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 ( J.N. PATEL, J )

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 ( A.A. SAYED, J )

The Oriental Insurance Co. Ltd. v. Shri.Manik R. Jagdale and Ors.

Case brief

What is this about?

What did the court decide?

The Oriental Insurance Co. Ltd. v. Shri.Manik R. Jagdale and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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